The coming tsunami: the care economy

Spain faces an extraordinary challenge: to be one of the oldest countries in the world. But the conquest is not going to be free. The strong aging of its demographic pyramid between now and 2050 will generate important social and economic challenges, as well as substantial business opportunities for the private sector. Without going any further, the long-term care needs of the population will grow dramatically in the next three decades, especially those related to dependency. The challenge requires rethinking the social health model and a strong economic injection to prevent the Spanish welfare state from cracking.

The countdown has started. And it has done so under minimums. Spain barely allocates 0.9% of GDP to long-term care (including health and social care), below the average for OECD countries, where this expenditure represents 1.5%. These figures show that it is not up to the investment that corresponds to such a long-lived country. The states that contribute the most are the Netherlands, where this item reaches 4.1% of GDP, and Norway, where it represents 3.7%. The international organization estimates that spending on care will double and even triple in 2050, driven by aging populations. And he believes governments will have to find a balance between providing access to good quality care and making their systems financially sustainable.

In this complex game of equilibrium is Spain, which also calculates that by 2050 its public spending on care could grow to more than 2% of GDP and that the number of people over 65 years of age who receive aid for dependency could double, reaching 1.6 million people, according to the document

presented by the President of the Government, Pedro Sánchez, last May as an exercise to decide "what country we want to be in 30 years." The plan adds that public spending on pensions could increase by up to five points of GDP (now it represents 12% of GDP) and health spending could increase by more than one point. A draft bill that Spain will have to pay. How? Among other measures, increasing contributions and studying the prolongation of the working life of those over 55 years of age, which would reduce public spending on pensions and would not be “to the detriment of youth employment, since the jobs performed by some and others are complementary and not substitute ”, argues the Government.

These projections are explained by the fact that the

generation , the largest in history, is aging. Despite the pandemic - and with the permission of others that may come later - in the next three decades this demographic tsunami - a consequence of the sustained decline in the birth rate and a drastic reduction in death rates - will become more pronounced. In 2050, a third of the Spanish population will be over 65 years old. It will be 16 million people, compared to the current nine million. And for every person in this age group there will be only 1.7 people of working age (today there are 3.4). By then, those over 80 will be 11.8% of the population.

Survival has been advancing continuously for four decades.

At the beginning of the 20th century, the Spanish population had a life expectancy at birth of just 35 years.

Today, it is over 83 years old and is the third highest in the world, only surpassed by Switzerland and Japan.

By 2050 it will have grown again, around three more years: up to almost 90 years for women and 85 years for men.

"The Spanish population will live much longer old than young," says sociologist María Ángeles Durán, a research professor at the CSIC.

More dependency

And, although the majority of the Spanish population up to age 74 considers their health to be good or very good, more years of life imply more dependency. And increasingly severe. "The aging of the population will considerably increase the absolute number of elderly people dependent on care," explains Vânia de la Fuente-Núñez, technical manager of the Unit for Demographic Change and Healthy Aging of the World Health Organization (WHO).

There will also be more chronic diseases and ailments. Currently, "only one in four people over 65 in Spain is free of disability or chronic disease," contributed María Luisa Carcedo, president of the Commission for Territorial Policy and Public Function and former Minister of Health, at the

, held last December. Heart disease, diabetes, chronic obstructive pulmonary disease, cerebrovascular accidents, dementia, sensory deficiencies, depressive disorders or osteoarthritis cause the loss of years of healthy life.

We must not forget chronic pain, present in one out of every four Spanish families and which represents a high cost: 2.5% of Spain's GDP. “The aging of the population and comorbidities, linked both to age and to the treatments that are fortunately achieving an increase in life expectancy, are clearly associated with a higher prevalence of pain and severity. We must anticipate ”, stresses Víctor Mayoral, president of the Spanish Society of Pain.

In the coming years, this leg of the so-called economy of care - a much broader concept that includes all care, from birth to death - will have a substantial weight in Spanish society. Because, one day or another "we are all going to be dependent or we are going to live with a dependent," predicts José Manuel Ramírez, president of the Association of Directors and Managers of Social Services.

An overwhelming reality in which the public sector plays the leading role, but in which the private sector plays a key role, since the dependency system is developed through a mixed financing scheme. Although the assessment, prescription and monitoring of dependency are public, the provision of services is private. “The dependency care sector is 80% or 85% in private hands. The Administration buys in the market the services it provides to society, acquired through agreements by the Administration ”, explains Luis Alberto Barriga, general director of Imserso.

Only the telecare and home help sector had a turnover of 1,755 million euros in 2020 -year of confinements and restrictions-, after registering a growth of 2% compared to 2019, the year in which turnover increased by 7.5%, according to DBK. The first five entities in the sector are Clece, DomusVi, Sacyr Social, Asispa and Suara Cooperativa, according to this consultancy. "Business activity related to formal care - management of residences, telecare and home help - represents around 0.5% of Spanish GDP," adds Benigno Lacort, CEO of Atenzia, another of the companies that offers home telecare , with data from the CEOE Social Services Subcommittee.

The demographic bomb is here and it will not only put the Spanish welfare state on the ropes. It will sweep the planet. "People aged 60 and over already outnumber children under five and by 2050 one in five people will be in that age group," says De la Fuente-Núñez, of the WHO. The number of people over 80 years of age or older will triple, from 143 million in 2019 to 426 million in 2050. Although it is important to bear in mind that “the pandemic has demographically modified some countries, with higher mortality rates in the population of more than 80 years ”, Mercedes Abades Porcel, professor of Geriatric Nursing and director of the University School of Nursing of the Hospital de la Santa Creu i Sant Pau review.

This is the hopeful, yet devastating, map of aging and requires states to act.

The challenge requires a comprehensive response that has not yet arrived.

"In 2020, only 49% of the countries had reported having a long-term care policy or strategy," according to the WHO representative.

Spain is heading for a care crisis if it doesn't take action now.

This is the bad news.

The good news, at least on paper, is that such a challenge has just entered the political agenda and, in fact, the Government has included the issue among the reforms of the Recovery, Transformation and Resilience Plan.

This is component 22, called Shock Plan for the economy of care and reinforcement of inclusion policies, which will be endowed with more than 3,500 million euros of European funds.

But, much remains to be done.

Spain has the umbrella of the Law for the Promotion of Personal Autonomy and Care for People in a Dependency Situation, approved in 2006 and known as the

of the welfare state.

However, and 15 years later, the long-term care system is underfunded and leaves thousands of people without coverage, which means that a large part of the care falls on the family environment (60% are in charge of of women) and, to a lesser extent, on the private sector.

The pandemic has only highlighted the shortcomings of the model, especially in residences.

Lack of funding

As of December 31, 2020, there were 1,356,473 people in Spain (30,000 less than in 2019 due to covid) in a situation of recognized dependency and another 141,556 pending assessment, according to data from the Association of Directors and Managers of Social Services . This means that 3.6% of the Spanish population needs support of greater or lesser intensity to carry out the basic activities of daily life.

The limbo of dependency —people with rights pending to receive services or benefits— is one of the system's greatest failures. There were 234,000 people in it at the end of 2020. They have against them that the average processing time for a file is 430 days, although in four communities (the Canary Islands, Andalusia, Extremadura and Asturias) it exceeds 18 months. Cristóbal Valderas, president of the Clece company, speaks without hot cloths: “About 174 people die a day with the approved aid. We are failing as a society ”. Specifically, in 2020 55,487 people died from the waiting lists.

The issue has become a political throwing weapon. "In 2021, the system incorporated 60,000 people and the waiting list was reduced by 8%," said Ignacio Álvarez Peralta, Secretary of State for Social Rights, during the last Senior Economy meeting. However, the communities and the Government had agreed to remove 60,000 people from that list of shame in 2021 and "only 20,000 came out," criticized Alicia García, spokesperson for the PP in the Social Rights Commission of the Congress of Deputies.

Public investment in the long-term care system was 8,907 million euros in 2020 (latest data available), around 0.6% of GDP. Average annual expenditure per beneficiary person amounted to 7,991 euros. The autonomous communities financed 84.4% and the state contribution stood at 15.6%, far from the 50% required by law and which no government has complied with.

"State funding stagnated after cuts in 2012 by the Government of Mariano Rajoy and this has meant that they stop investing 6,000 million euros," denounces the president of the Association of Directors and Managers of Social Services, José Manuel Ramírez.

However, he adds, in January 2021, the Government and social partners agreed on a shock plan for the agency that contemplated an increase in financing of 600 million euros by 2021 and the recovery of the agreed level.

"The three legs of the crash plan are to reduce waiting lists, improve home and residential care services and improve working conditions for workers in the sector," lists the Secretary of State for Social Rights.

Expense or investment

The experts consulted warn that one of the great challenges in transforming the care model is treating the cost as an investment and not as an expense. “For every million euros of public investment, 35 direct, stable and non-relocatable jobs are generated. There is no public investment that provides so many direct jobs, ”says José Manuel Ramírez. Specifically, the sector employs 250,000 people. In addition, Ramírez insists, economic returns of 39.9% are generated. "For every million euros, 400,000 euros are reverted to the State through VAT, corporation tax and Social Security."

Also, the professor at the University of Castilla-La Mancha Fernando Bermejo states that the dependency item should not be understood only in its spending dimension: through the consumer demand it generates, employment and income are also created. The results of his research reflect that "with a dependency expenditure of 5,400 million from 2009 to 2015, the level of production that generates this expenditure is more than double." Most of the income obtained in production is distributed between the wages of the workers and the benefits to the companies, but another part returns to the Administration. For example, annual public spending on dependency in Spain generates a return to the public coffers of 37% of the initial spending through taxes.

The sociologist María Ángeles Durán, CSIC research professor, the first woman to receive the National Sociology Prize and author of the book

, insists on talking about care as the production of wealth. A wealth that, however, is not reflected in GDP because it is a free job that usually falls to women. Durán estimates that this unpaid work "would correspond to 28 million full-time jobs." The researcher has developed the concept of

, an emerging social class very unprotected and formed, above all, by immigrant women who care. "The burden of care that comes our way is tremendous," he says. Durán says that for every 12 hours that professionals put in, 88 must be added. "Imagine the disproportion between the paid and unpaid sectors: for every 12 hours of the first, another 88 hours are needed from the private sector, families or self-care." .

Another of the dependency's challenges is the pressing, and very worrying, lack of manpower. "The problem of aging lies in the lack of resources and fair wages comparable to countries such as the Nordic countries, where it is considered a plus to take care of the elderly. The salaries of these professionals are higher and this makes it easier to retain them in the sector, ”says Mercedes Abades. The general director of Imserso, Luis Alberto Barriga, estimates that "some 290,000 more professionals will be needed in the care sector in 2040." It is one of the least attractive to work for its work and salary conditions. It is estimated that around 80% of caregivers are not professionals.To the point that "60% or 70% of domestic workers are doing care tasks today and that is a defect in the system," says Barriga.

This lack of labor and high turnover is our daily bread in home care companies, where "three out of every four workers are women," says Ramírez.

Clece, an ACS company, is the main company that works in the long-term care system.

It gives home help to 122,365 users through 18,376 professionals and its market share was 19.45% in 2020, according to DBK.

Its president emphasizes the lack of financing and criticizes the increase in copayment.

"It hinders the universal access of the elderly to these services," says Valderas.

According to the autonomous community, the dependent pays between 0% and 75% of the service.

A caregiver attends to an older woman at her home in Manzanares El Real (Madrid) Santi Burgos

These companies are blamed for the low wages and working conditions of the staff. Valderas believes that it is "unfair." "Companies only pay the salary that is included in the specifications that the municipalities put out to tender," he argues, and which ranges from 13 euros an hour on average in Andalusia to 26 euros in the Basque Country. The president of Clece believes that it is time to dignify the sector and asks unions and employers to increase salaries and that these are reflected in the specifications.

Growing aging and the ever-increasing demand for care, as well as the inability of the public sector to meet it, is the fertilizer for many companies and

born in recent years. Its purpose is to sell care and its success is a sign of the exponential growth that the

sector is having in Spain. A good example is Cuideo, founded in Barcelona in 2016 and a leader in Spain in the home care sector. His contribution has been to digitize the sector and offer services anywhere in the country. "Since the pandemic began, the demand for home care has multiplied by three," says José Luis Ballescá, Business Development analyst at Cuideo. Other companies are Qida or Senniors.

Families are in need and in a hurry. “From the time they start searching on Google until they find a caregiver, less than 24 hours pass,” according to the Navarran

Familiados, which has recorded that in 2021 there were more than 300,000 searches for caregivers per month on the internet. The hour of care is paid at 14 euros on average in provinces such as Navarra, Barcelona or Gipuzkoa, while it barely reaches 10 euros in Seville, A Coruña or Murcia.

The list of this business ecosystem is extensive. Some examples are Tucuvi (artificial intelligence and voice to monitor patients at home) or SeniorDomo (with devices such as locators or fall detection systems). "It is an economic sector that is making its way and that, in addition, is attractive for foreign investment," explains María Romero, managing partner of Afi's Economics area. It refers to the interest shown by international investors in this type of company, in nursing homes and in the distance care business.

Spain sets the counter to zero to surf the biggest wave in its history.

Rethinking the model from top to bottom "is an issue that is going to require a kind of Toledo Pact," Barriga believes.

And he adds: "There is already awareness of the problem and the challenge, which is not a little."

María Luisa Carcedo is clear that the strategy must be global: “We have to rethink society as a whole.

That people who want to die at home can do so;

urban planning, housing or public transport must be redefined ”.

Roadmap

The Spanish Government's roadmap is to reinforce dependency care policies and promote change in the long-term care model, promoting deinstitutionalization. In other words, priority will be given for these people to remain in their homes and be cared for in community settings for as long as possible, as opposed to being transferred to residences. Older people want to be at home. "He doesn't want to die around white coats," says José Manuel Ramírez. This does not mean the closure of the residences, which should be people-centered and will be more modular and smaller centers.

New options will emerge, such as self-care formulas based on technological innovations (telemedicine,

, internet supervision, home automation adaptations).

We are talking about social robots, smart walkers, advanced telecare (warn if, after a few hours, the user has not turned on the tap, for example) ... Spain also contemplates cohabitation with intergenerational support between non-family members, the so-called

in its many forms (collaborative, cooperative, collective housing) or time banks or accompanying volunteers to avoid loneliness.

Flamenco classes for seniors in Fuenlabrada (Madrid) .Kike Para

'Silver economy': an increasingly valuable vital phase

Turning years and combing gray hair is no longer synonymous with entering discount time. Sarah Harper, founder of the Institute for Population Aging at the University of Oxford, has the firm belief that old age does not reach 70 years, but when we become dependent.

The greater life expectancy of the world population and the extension of the years in good health are an unquestionable achievement.

They are the foundations of the so-called

the huge business around the needs of those over 50 or 55 years old: leisure, tourism, sports, security, food, culture, pension plans, urban planning, housing, technology, financial products ( reverse mortgages, bare ownership ...), insurance, health, aesthetics and cosmetics, fashion, health products, food ... The care economy and dependency care are also a part of this silver economy.

More information

'Viejenials': the big business of enjoying old age

But the bulk is made up of people who are in good health, who can continue working, saving, creating and consuming.

Companies are challenged to customize their products for these increasingly demanding segments of the population.

“New products and services have emerged for a population that has a completely renewed attitude towards aging.

A population seeking an active and purposeful life.

The elderly today have sufficient health and quality of life to continue contributing to society their talent, their work and their ability to consume.

And this represents an unprecedented economic shock ”, indicates Benigno Lacort, Atenzia's CEO.

The fact that the population has a birthday currently represents one of the greatest opportunities for GDP growth for Spain.

Above all, because it is expected that 23.3 million Spaniards (53% of the total population) will be over 50 years of age in 2050.

The

generated in Spain a direct, indirect and induced impact of 325,303 million euros in 2019, which is equivalent to 26% of GDP.

This is reflected in an analysis prepared by Oxford Economics in collaboration with the University of Salamanca for the CENIE (International Center on Aging).

It generated 4.4 million jobs.

According to the European Commission, it has a growth potential of 5% per year until 2025. Forecasts indicate that the gray hair economy will reach 6.4 billion euros and 88 million jobs for that year.

This would be equivalent to 32% of GDP and 38% of employment in the EU.

Continue working

In the workplace, this senior generation wants to be actively aging and be able to decide if they want to continue working once they have reached the legal retirement age. The problem is discrimination by age or ageism, which is increasingly present in Spain, as evidenced by the fact that unemployment among those over 50 has skyrocketed despite the general drop in unemployment. If the activity rates of the Spanish population over 55 were equated with that of countries such as Sweden or Denmark, where a significant part of the elderly combine their retirement with some work activity, Spain would gain 1.6 million active people from here to 2050, according to the document

This population cares for itself, has assets and income. “As a whole, it has the highest purchasing power of all population segments. In Spain it is estimated that those over 60 years of age hold 60% of the country's wealth, ”says Lacort. Hence, more and more companies are interested in this consumer profile.

One of the business segments that is growing the most are the different formulas to convert housing into money and continue living in it until the end. Do not forget that the house is considered by those over 65 as their best pension plan; which is the place where they want to reside; that the group of older ages does not have access to bank financing; and that, faced with severe dependency, the income flow is most likely to be in deficit. According to a study by Seguros Santalucía, the economic cost of grade III dependency care represents 1.6 times the average amount of the public pension for retirement among people between 80 and 84 years old, increasing up to 1.8 times between the population aged 85 and over. This deficit is greater in the case of women,since the average amount of contributory retirement pensions is lower than that received by men.